Pricing the Competition

Salon.com’s initial public offering this week raised $25 million on 2.5 million shares–not bad for a money-losing company in a less-than-lucrative industry (we can relate to that). Several weeks ago, Michael Kinsley dissectedSalon’s penchant for exaggerating–sometimes wildly–its financials. And in Wednesday’s “Moneybox,” James Surowiecki argued that Salon’s Dutch-auction IPO model–which lets the market set the initial stock price–need not always be a poor relation of the traditional IPO model, in which underwriters set the initial price. (Confused about what a Dutch auction is? Let “Explainer” fill you in.)